Glossary · Candlestick & Chart Patterns
Engulfing pattern
A candle that fully covers the previous candle's body.
An engulfing pattern is a two-candle formation where the second candle’s body completely covers the first candle’s body. A bullish engulfing usually appears after a decline: a down candle followed by a larger up candle. A bearish engulfing flips that sequence after a rally.
The pattern suggests a shift in control from one side of the market to the other. Size, location in the prior trend, and volume can all affect how seriously traders take it.
Example
Day 1 closes down with a body from $51 to $49. Day 2 opens near $48.80 and closes at $52 — a bullish engulfing that swallows the prior down body.
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